By David Lawder
WASHINGTON (Reuters) - Treasury Secretary Timothy Geithner went on the offensive one day after Standard & Poor's threatened to downgrade its top-tier rating on U.S. government debt, saying there was "no risk" of a loss of the coveted rating.
Prospects for a deficit reduction deal were improving, Geithner said on Tuesday as he appeared in a morning blitz of television shows -- while saying in one appearance that he did not have to reassure foreign buyers of U.S. debt in the wake of the S&P decision.
Geithner said that Democrats and Republicans now agree on the need to put in place "enforceable" targets to slash deficits by some $4 trillion over the next decade or so.
"If you listen carefully now, you see the leadership of the United States of America ... recognizing now this is the right thing to do for the economy," he told Fox Business Network.
Standard & Poor's on Monday threatened to downgrade its AAA rating on U.S. Treasury debt unless the Obama administration and Congress find a way to slash the yawning federal budget deficit within two years.
A downgrade would erode the status of the United States as the world's most powerful economy and diminish the dollar's role as the dominant global currency. It also would likely crank up borrowing costs, potentially hurting economic recovery as investors demand higher returns for holding U.S. debt.
Geithner disputed S&P's finding that the U.S. credit outlook was negative, and said it was difficult for people outside Washington to cut through partisan political rhetoric.
"Actually, I think things are better than they've been if you want to think about the prospects for improving our long-term fiscal position," he said on CNBC.
"If you're looking very carefully at what's happening in Washington, you see people on both sides -- Democrats and Republicans -- agreeing with the president that we have to put in place some reforms now to bring down our long-term deficits," he added.
Prices for U.S. government debt were little changed after Geithner's remarks, while prices later rose modestly as worries about euro zone debt bolstered a safety bid for Treasuries. The benchmark 10-year Treasury yield was slightly lower for a second straight day.
LOCKING IN TARGETS
Geithner told Bloomberg Television that he did not have to reassure foreign buyers of U.S. debt in the wake of S&P'S decision and said investors were still showing confidence in U.S. debt and the growth prospects of the U.S. economy.
"You can see that in the price at which we borrow every day, but we have to earn that confidence," he said.
President Barack Obama and Republican lawmakers have laid out competing visions for how to tackle the deficit, which is projected to hit $1.4 trillion this fiscal year.
Obama wants wealthy Americans to shoulder a greater share of the tax burden and has also proposed cuts in spending on domestic programs and the military. Republicans are pushing for deeper spending cuts and want to make permanent Bush-era tax cuts for families earning more than $250,000 a year.
Geithner said he believed it was possible for the Obama administration to secure a deal with Congress to "lock in" targets and mechanisms to cut deficits by $4 trillion over the next 10 to 12 years.
Entitlement programs such as Social Security and Medicare would have to be part of the discussions, he said.
Long-term deficit reduction also will require some "modest" tax hikes for wealthier Americans, Geithner said.
Obama, speaking at a student forum in Virginia, said he also believed that Republicans and Democrats can reach a deal to cut the deficits, but it won't be easy.
"There will be some fierce disagreements," Obama said.
(Reporting by David Lawder; Editing by Leslie Adler )